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Over the last decades, foreign investors’ interest in Mexican real estate has grown significantly. Foreign investors have spent billions of dollars in residential and commercial real estate in recent years, and reputable analysts agree that investment will continue to grow in the foreseeable future. Many investors and their attorneys rely on local counsel when dealing with Mexican real estate transactions. Yet, it is crucial for investors and their attorneys to understand the current trend of the Mexican real estate market, the applicable legal framework, and the basic structure of the Mexican real estate acquisition process before engaging in any Mexican real estate acquisition transaction.

Accordingly, this article starts by analyzing the outlook of the Mexican real estate market in light of the current state of our economy and the efforts of Mexico’s President to promote Mexico overseas and attract foreign investment. These efforts are evidenced by the National Infrastructure Program, the 2007-2012 Tourism Plan, and his strong efforts to fight corruption and violence.

The second part of this article sets forth the legal framework applicable to real estate transactions by Mexican foreigners and explains the nature of the Calvo Clause, the need and basic structure of a land holding trust, and how the location and nature of the property affect the ability of Mexican foreigners to take legal title to Mexican real estate.

The third and last part of this article describes the process by which residential real estate located within the Restricted Zone is acquired, including certain pre-offer and post-closing considerations. Issues of concern related to the form and nature of the preliminary agreements, the formation of a land holding trust, the reason why real estate transaction needs to be closed before a notary public, and some mayor differences with California real estate transactions are also addressed in this Section. (To be continued)

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